ECJ gender ruling explained

The EU Gender Directive came into effect in 2012. Find out what it means for you…


The European Court of Justice’s Gender Directive came into force in December 2012 and means that insurers can no longer take gender into account when calculating insurance premiums.

The Directive applies to all insurance policies that used to factor in gender when prices were calculated, so this includes car insurance and life insurance, as well as annuities (the amount of income you get when you retire).

How have insurance policies been affected?

Car insurance is one of the main areas affected by the ruling. In the past, women paid less than men for car insurance because, in general terms, women make fewer claims, and the claims they do make tend to be of lower value.

When it comes to life insurance, the statistics show that women live longer. In the past, that meant they paid less than men, because there was less chance of them dying during the term of the product.

And with annuities (a guaranteed income, paid for life, in return for a lump sum), women always got less for their money because, statistically, they would be in receipt of payments for longer.

But the gender ruling has changed all this, with insurers no longer permitted to make assumptions based on gender – that means an end to what’s known as ‘gender-specific underwriting’.

So now men and women start off on an equal footing when it comes to calculating their premiums. The statistical evidence about driving safety or longevity can no longer be taken into account.

Why should women pay more?

Many people – including insurance company chiefs and other commentators – opposed the ECJ ruling because they said it would penalise women with an unfair hike in their premiums for car insurance.

Insurers say they need as much information as possible to help calculate how much to charge, and they say using gender is reasonable given the statistical evidence built up over years about the differences between men and women.

The data indicates that women are less accident-prone than men, which has earned them relatively low premiums.

But with the ECJ ruling in place we have moved from ‘gender-specific’ to ‘gender-neutral’ underwriting. Insurers must work out how much they are going to charge with no reference to the driver’s gender.

The principle behind the ECJ ruling is clearly gender equality. The consequence, however, is that women have seen insurance premiums go up. Younger women in particular have seen increases for car insurance at renewal. This is because young drivers make the most claims, so insurers have had to push up prices.

Is there anything women can do?

There is an argument to say that, if a person warranted a certain level of car insurance premium before the ECJ ruling came into force, then they should be able to pay a similar amount now the ruling is in effect.

For this reason, insurers will want to try to find out as much as possible about an individual’s driving history so as to determine what kind of driver they are.

If you can point to a ‘clean’ driving record, with no at-fault accidents or motoring offences on your record, you should be able to secure a realistic premium.

But there are a number of actions women (and men) can take to ensure they get cheap insurance that provides all the protection they require:

  • Shop around: avoid the temptation to renew your policy each year and always shop around to see whether there’s a cheaper deal out there. Insurers rarely offer their best deals to existing customers and often reserve their best prices for new ones
  • Boost security: you can secure discounts on your car insurance by fitting an alarm, an immobiliser and a tracking device. You will also pay less if you can park ‘off road’ at night, preferably in a garage but at least on a driveway
  • Drive less: the more miles you drive, the more likely you are to have an accident. So if you can limit your annual mileage, you could pay less for cover. Always give an accurate figure when your insurer asks how far you drive each year

For more ways to save on your car insurance, read our money saving tips.

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